A new IMF round and research into the pending files

In conjunction with the government putting the draft 2027 budget on the discussion table, an International Monetary Fund mission landed in Beirut for a new evaluation tour. This visit comes at a sensitive financial moment that is witnessing sharp debates over reform legislation and the fate of deposits, putting government performance and financial policies under the microscope, especially in the files of the general budget, the tax system, and ways to address the financial gap.

In this context, banking risk expert Dr. Mohamed Fahili confirmed in an interview with “Lebanon 24” that the mission’s agenda includes pivotal meetings with the Ministry of Finance as the link between the Fund and the Lebanese state, in addition to the Bank of Lebanon and the Ministry of Economy as they are part of the committee formed by the Presidency of the Council of Ministers to negotiate with the Fund. He pointed out the necessity of involving all concerned parties in the projects presented in these discussions, especially the Ministries of Social Affairs and Works, the Reconstruction Council, and the Electricité du Liban.

Regarding the basic axes, the law to address the financial gap, distribute losses, and recover deposits stands out as a major file, along with the financial framework and the budget axis, as the Council of Ministers is currently discussing the draft 2027 budget in preparation for its completion after the Prime Minister returns from the United States and transfers it to the General Secretariat of the House of Representatives in accordance with constitutional principles. It is also assumed that reforming the tax system will be the Fund’s top priority in light of the confusion surrounding the mechanism for imposing taxes, in addition to presenting the files of reconstruction and investment projects, most notably the electricity sector.

Fahili stresses not to inflate expectations, explaining that they are not intended to sign any initial or final agreement nor to evaluate specific achievements, but rather aim to discuss the steps and obligations required of the state, warning against statements that raise the ceiling of expectations in order to avoid disappointment.
Regarding the Fund’s position on the draft financial gap law expected to be discussed in the Finance and Budget Committee headed by Representative Ibrahim Kanaan, Fahili suggested that the mission’s observations would focus on protecting small depositors, charging banks’ capital with losses first, and avoiding making promises to recover deposits that exceed the limits of actual liquidity available at the Bank of Lebanon, commercial banks, and the state to ensure the sustainability of any solution.

The mission begins its meetings with an opening meeting at the Ministry of Finance, which includes representatives of Finance and Economy, the Bank of Lebanon, the Presidency of the Republic, and the Government, followed by a meeting with the Minister of Finance to discuss the medium-term financial framework and the 2027 budget, in addition to a separate meeting to discuss the financial gap file with the Bank of Lebanon at the Phenicia Hotel.
The mission will continue its work tomorrow with technical meetings focusing on financial performance, expectations, revenues, spending, and follow-up to the 2027 budget, in addition to a second meeting with the Bank of Lebanon on the financial gap. On Thursday, the discussions will move to the files of reconstruction, investment and social spending, reform of the electricity sector, and the conditions of the Electricité du Liban, and the visit will conclude on Friday with a discussion of the debt and financing file within the path of pursuing reforms and restoring stability and confidence in the Lebanese economy.